Section 16 Filings and COVID Relief

Unfortunately, the SEC is not as generous as the IRS, so the deadline to submit Section 16 filings has not been extended. If your insiders are selling stock (or if they are buying because the price is low), the Form 4 reporting those transactions is still due in two business days. But the SEC has offered some relief on getting the filings signed and submitting Form ID.

Signature Requirement

Although Forms 3, 4, and 5 are submitted online and thus include an electronic signature, the SEC requires a manually signed copy to be kept on file for at least five years. In normal circumstances, this copy should be signed before or at the same time the electronic version is submitted to the SEC.

This requirement generally isn’t a problem when the person preparing and submitting the filing is in the same office as the person who is signing the form. Currently, however, these two people may be working from their separate homes. In recognition of this, the SEC has issued a statement relaxing the requirement for manually signed copies.

Per the SEC’s statement, the requirement to retain a manually signed copy of the form will be met if the following conditions on are fulfilled:

• The signatory signs a paper copy of the filing and provides it to the filer as soon as reasonably practical.
• The paper copy indicates the date and time that the signature was executed.
• The filer establishes and maintains policies and procedures governing this process.

The signatory may also provide the filer with an electronic record (such as a photograph or PDF) of such document when it is signed.

Notarization of Form ID

Back when I inadvertently let my EDGAR password expire and had to go through the nightmare of submitting a new Form ID to get new codes assigned to me, one significant obstacle was getting my Form ID notarized. Even though I have a good friend who is a notary (thanks Lydia Terrill), it still took months.

If only I had waited for a global pandemic because the SEC has adopted a temporary rule suspending the requirement to have Form ID notarized. The Form ID should still be signed and should include a statement that the applicant is unable to obtain notarization due to difficulties related to COVID-19.

This isn’t a free-for-all; a notarized copy of the Form ID must be submitted within 90 days (so eventually I would still have had to take Lydia to lunch, but maybe if I had a deadline, I would have gotten around to it sooner). The notarized copy should be submitted as correspondence to the applicant’s EDGAR account. The temporary rule is in effect from March 26 through July 1, 2020.

Stay safe and healthy (but get your Section 16 filings submitted on time).